By Avi Salzman

Logically, M&A should be picking up more than it has — corporations have a lot of cash on their balance sheets, valuations are not so stretched as to make buyouts unaffordable, and credit is available. But M&A hasn’t been rising — in fact, it’s been trending down for more than a year, at least in terms of the number of deals announced, Jeffrey notes. That leaves companies that depend on advisory fees in the lurch.

“Although M&A activity has shown some recent improvement, overall completed and announced deals in 3Q12 were weaker than last quarter and last year. Notably, activity in the U.S. has generally underperformed global trends this quarter as completed deal values in the U.S. were down 32% q/q, compared to global completed deals which were down 21%. In terms of announced deal values, however, the U.S. was just 5% lower q/q while announced deals are down 17% globally. We also note that the total number of global announced deals has been steadily declining since 1Q11. While we continue to believe the underlying fundamentals for M&A remain strong—abundant corporate cash balances, available credit, and compelling valuations—increased market uncertainty, particularly ahead of political changes, continues to leave many participants on the sidelines in the near term.”

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